All aid to Rwanda is to be halted immediately amid controversy over the east African state's involvement in violence in neighbouring Democratic Republic of Congo (DRC).
£21 million was due to be sent over to the tiny republic in December but international development secretary Justine Greening today announced the payment would not go ahead.
"The government has already set out its concerns over credible and compelling reports of Rwandan involvement with M23 in DRC," she said.
"This evidence constitutes a breach of the partnership principles set out in the Memorandum of Understanding, and as a result I have decided not to release the next payment of budget support to Rwanda."
Paul Kagame's government was the darling of the international community, securing millions in aid from across the world after his free market reforms brought high levels of growth and prosperity to the previously war torn nation.
But this growth has come at a price, with political freedoms being steadily eroded. The general election in the country in 2010 was won by Kagame's RPF party with a sweeping majority after some opposition parties were barred from standing and disbanded.
Former chief whip Andrew Mitchell faced scrutiny earlier this month for his decision to award £16 million in aid to Rwanda on his last day as international development secretary.
Last month Rwanda was elected to the UN Security Council as a non-permanent member in a rather bizarre move considering the country's alleged involvement in funding and arming the M23 rebels in bordering Congo.
A formal objection was also raised by the DRC but an overwhelming majority of the General Assembly supported their accession.
Greening also today confirmed that £18 million of aid would go to the DRC, providing food relief for up to 100,000 people.